1/21/2004 @ 12:32PM

Flying Pork

When the federal government deregulated the airlines in 1978, it eased concerns that smaller communities would get stranded with a program called Essential Air Service. The program guaranteed that towns with air service as of October 1978–provided they were further than 70 miles from a bigger airport–would be eligible for subsidies keeping some measure of that service in place.

In fiscal 1995, EAS’s cost stood at $37 million per year. Following the Sept. 11, 2001, attacks, Congress bumped up funding for EAS from $50 million to $113 million. A month ago, the program was reauthorized. Price tag: $127 million for each of the next four fiscal years.

If that subsidy creep looks worrying, research from transportation think tank Reconnecting America suggests things will only get worse without changes in transportation policy.

In 2002, the group released “Missed Connections,” a survey quantifying the drop in air service at various categories of airports during that year. That report argued, however, that the declines were more than just a result the Sept. 11 attacks and the economy’s downturn; instead, they reflected fundamental structural changes sweeping the airline industry.

Last month, the organization published “Missed Connections II,” a follow-up study that largely reinforced the earlier findings. At large-hub airports, for example, the number of weekly flights declined 1.7% from 2002 to 2003, on top of the 9.5% drop shown from 2001 to 2002. Medium and smaller hubs had a slight 0.1% gain in weekly flights but still showed a 9.6% reduction from 2001 to 2003. Smaller communities were some of the biggest losers–just 20% of those surveyed showed gains in weekly flights, while 80% either stayed flat or declined.

Driving the changes here is the continued onslaught of the low-cost carriers:
AirTran
,
JetBlue
,
Southwest
and others. With their point-to-point service and lower labor costs, they’ve forced the “network airlines”–the hub-and-spoke operators such as
Delta Air Lines
and
Continental Airlines
–to refocus their strategies and cut back.

“We could see network carriers shrink to a level where they’re practically operating from hub to hub,” says
Hank
Dittmar
Hank Dittmar
, Reconnecting America’s president and co-author of the “Missed Connections” study. “They’re going to have much more limited networks than they’ve had in the past,” he adds.

A former airport executive, Dittmar sees trouble in all this, and not just for the big airlines and their passengers. Cities that own airports ought to be careful issuing long-term debt based on whether an airline is serving them, he says.

And, of course, as the spokes get dropped, smaller communities will continue to suffer. But for Dittmar and colleagues, salvation won’t come by reregulating the airlines or by shoveling more money into programs like EAS. Instead, they think transportation policy needs to adapt to promote smarter, more cost-effective ways of getting people around.

One of their principal ideas is to encourage the transformation of airports into “travelports”–that is, hubs where air, bus and/or rail service converge. Doing so, they argue, would free up airport capacity, give travelers more options (particularly in the event of 9/11-type emergencies) and let airlines focus on higher-value, longer-range trips.

The travelport phenomenon has already taken hold in Europe; travelers to Paris’ Charles de Gaulle Airport, for example, can transfer directly at the terminal to high-speed trains.

As for subsidies, Reconnecting America would like to see programs like EAS merged into a more flexible “Essential Transportation Service.” The idea here would be to identify and set up corridors linking small towns by bus or rail and then substituting that kind of transportation when it beats airline flights in terms of cost-effectiveness and frequency of service.

These ideas have gotten some play in Washington. Under the Bush Administration’s aviation funding proposal last year, EAS would have been modified to require bus service for distances under 100 miles, and proof that air service was more cost-effective for distances over 200 miles.

The measure didn’t make it into the law enacted in December. But Dittmar, once an adviser to the White House on transportation and no stranger to Capitol Hill, is still shopping his travelport ideas to Congress, which is now weighing a $375 billion highway bill.